John W. And Regina R.Z. Green v. Commissioner of Internal Revenue

Query: Is a taxpayer entitled to a “home office deduction” for a room he uses exclusively for telephone calls from clients? A divided Tax Court allowed such a deduction. We reverse.

FACTS

The facts are not disputed. As an account executive for Dillingham Land Corporation, Green was responsible for the management of seven condominiums. He supervised resident managers and answered to each condominium’s board of directors. He dealt weekly with about 49 persons.

Green spent about 20 percent of his 8-hour workday in the office provided by Dillingham. The secretary there did his typing and took telephone messages. The rest of his day was in the “field.”

Dillingham required Green to be available for telephone calls from clients who could not reach him during regular office hours. He averaged two hours or more on the telephone each night talking to managers, board members, and others associated with the condominium business.

Green converted a bedroom into an office. There he kept files relating to condominium matters and a telephone used strictly for incoming calls from clients. Clients rarely visited him there.

Green declared an $840 deduction on his tax return for the expense of…